By Commodity News Service Canada
WINNIPEG, September 16 – The Canadian dollar closed sharply stronger relative to the US dollar on Tuesday, breaking back above the 91 cents US mark.
The currency was underpinned by positive Canadian manufacturing data, analysts said. Canadian manufacturing sales increased 2.5 per cent to C$53.7 billion in July, exceeding the previous record of C$53.2 billion in July 2008, Statistics Canada said. Pre-report estimates called for an increase of only one per cent.
The Canadian dollar closed at US$0.9116 or US$1=C$1.0970 on Tuesday, which compares with Monday’s North American settlement of US$0.9050 or US$1=C$1.1050.
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Bank of Canada’s governor Stephen Poloz made a speech Tuesday afternoon which further supported the loonie, as he was optimistic about Canada’s export sector growth.
Spillover support from the strength in commodities and other commodity-linked currencies added to the bullish tone, brokers said.
However, traders were still nervous about the upcoming vote for Scottish independence on Thursday, which kept a lid on the upside. They were also looking ahead to Wednesday’s US Federal Reserve interest rate announcement.
Canadian bonds ended mostly lower on Tuesday, reacting to the better than expected Canadian manufacturing data, participants said.
The two-year bond yielded 1.149% late Tuesday, from 1.151% late Monday. The 10-year bond yielded 2.245%, from 2.235%. Bond yields fall as their prices rise.
